A Gamble That Didn`t Pay Off

Canada Closes The Book On Its Sports Bet Botch

January 06, 1985|By Ronald Koziol, Chicago Tribune.

TORONTO — Many said it was doomed from the start. Others said it never should have begun. In the end, both opinions turned out to be right.

That end came Dec. 30 when Sport Select Baseball, the Canadian government`s attempt at legalized betting on professional sports teams, went out of business. The next day, the locks were changed on Canadian Sports Pool Corp.`s once-plush suite of offices in this city`s Willowdale section. Offices in 10 other cities had closed earlier.

In six months of operation, the pool lost an estimated $46.5 million

($36.04 million in U.S. dollars), and it appears that auditors won`t know the final figures until next fall. One thing is certain: It will be a long time, if ever, before the Canadian government gets involved again in legalized gambling.

``I can assure you that it is not our intention to get back into the lottery, or sports pool, or any other kind of gambling operation,`` said Otto Jelinek, sports minister for Canada, whose agency was to have received $200 million from the sports pool toward the costs of the 1988 Winter Olympics in Calgary.

THUS, WITH LITTLE fanfare, the first attempt at large-scale legalized sports betting in North America went out of existence.

Everything that could have gone wrong did. Indecision, delays, political instability, opposition from the country`s 10 provinces that operate their own lotteries, and a complicated betting ticket were but a few of the problems.

The June, 1983, legislation established a Crown company, which is run privately but has as its only shareholder the Canadian government. Plans were for the company to begin hiring a staff, which eventually totaled 673 people, in October, 1983.

Sales of the first betting tickets were to start the following October and would coincide with the opening of the National Hockey League`s 1984-85 season. The decision seemed logical to game officials, inasmuch as hockey is Canada`s national pastime.

HOCKEY, BASEBALL and professional football were to be the mainstays of the new wagering game.

A smaller and updated computer that could handle twice as many transactions as other computers was created. The computers were scheduled to be in place at thousands of retailers throughout Canada by the October starting date.

``There was only one problem with that plan,`` said Duncan Brown, vice president of corporate planning for the sports pool. ``We didn`t receive our initial operating funds of $10.5 million until mid-February, and we couldn`t begin hiring until then. With the funds came word from the government that we had to begin operations in 10 weeks, so we had to devise a new product in a hurry, and that was our Sports Select Baseball card.``

Then the corporation was hit with a series of lawsuits. Canada`s provinces, which had run their own lotteries since 1979 and paid the federal government a fee of $24 million a year for the privilege, filed the first suits. The contention was that the government had reneged on an earlier promise that in exchange for the yearly fees, it would no longer operate a national lottery.

A COURT injunction to stop the game was also sought by Bowie Kuhn, then commissioner of major league baseball.

The court battles were won by the new corporation last May 1, only a day before the game was to start. But dozens of other problems soon followed.

``The provinces threatened to pull their computer terminals and stop the retailers from doing any lottery business if they sold our product,`` Brown said. ``But we managed to put together 17,000 sellers and created a presence in the marketplace.``

Brown`s next major problem turned out to be the product itself.

``The ticket we developed was a cross between a lottery ticket and a sports betting pool,`` Brown said. A player would buy a $2 ticket to wager on four major league baseball games. If he picked the four winners, he could then rub a section off the card to see how a computer picked the other nine games being played.

THE POOL THEN would pay off $12 to $250,000, depending on the number of winning teams on the ticket. Sound complicated?

``Yes, it was very complicated, and people just could not interact to the game, so they didn`t play it,`` Brown said.

``Then there were accusations that the corporation had become a patronage haven, because two of our executives had worked for Prime Minister Pierre Trudeau. No one ever asked if they were qualified for the jobs, which they were.``

The corporation`s officers were still reeling from the patronage charges when reports began circulating that the lottery was in trouble and couldn`t pay off winners.

``If there is anything in this business that scares a consumer, this is it,`` Brown conceded.

But Brown said it was a scare tactic by the provincial lotteries. ``They did one helluva job on us,`` he said.

Despite the many pitfalls, Brown believes that the concept of a sports lottery based on professional sports results is one that would work.

``This type of betting draws different people, people who have a knowledge of sports,`` Brown said. ``All we had hoped for was to get a 10 percent share of Canada`s $200 billion lottery market, and it would have resulted in a $60 million-a-year profit.

``It came down to the fact that the provinces don`t want competition.``